Executive panel discussion on manufacturing

Siemens held an executive panel discussion on manufacturing at Hannover Messe discussing topics ranging from challenges in the industrial sector to energy efficiency to connected technology and big data.

Siemens

04/27/2016

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Siemens held an executive panel discussion on manufacturing at Hannover Messe discussing topics ranging from challenges in the industrial sector to energy efficiency to connected technology and big data.

Question: What are the main challenges that the industrial sector is facing today, and what role can digitalization play in addressing them?

Raj Batra: The main challenge is time to market and shortening product lifecycles. It's not enough to come up with a great product idea, you have to design the manufacturing very quickly. Digitalization is the key to doing this. For example, you can eliminate the need for physical prototyping, which can be an expensive and time-consuming process. Another example, simulating production allows you to start making your product virtually even before your factory is operational. This simulation also allows you to detect production problems early–problems that might be avoided with a small change in product design. This is incredibly valuable to manufacturing because 80% of its production costs are determined in the product design phase, according to McKinsey.

Anne Cooney: In the process industries, companies also care about speed,but are very urgently focused on high utilization and safe, environmentally compliant operations. Yet the same kind of digitalization tools that Raj just mentioned will also address these challenges. Virtual design tools are most often focused on the design of the plant or processing site, rather than on the product itself. The end result is the ability to virtually design a plant or process component that meets its operating requirements before physically building it. Importantly, this applies to safety as well, where the ability to have a virtual worker walk through a virtual factory can expose pinch points, trip hazards, and other risks. And along the way engineering time can be reduced by 20-30% or more.

Kevin Yates: Across the industrial market, customers are facing the need to:

Minimize production costs

Ensure their processes are as safe, reliable and efficient as possible

Continue to add value to their brand

All of which impact their ability to deliver value to their shareholders. There is a lot that can be done within a company's walls to achieve these goals. A new, digitized production process can cut go-to-market times significantly or more efficient motors that require less up-time.

But, we also see energy as an important means to achieving each of these goals. Flexible production capacity requires flexible energy systems.

Managing energy usage efficiently and finding new ways to harness opportunities in today's energy marketplace can have a significant impact on company's bottom line and an industrial customer's ability to successfully serve markets.

Joris Myny: Challenges include the right market–am I developing a product my customers will like? Time to market–will I be the first to market? Efficiency–will I make money with my innovation? Digitalization is pivotal and enables the creation of a digital twin. It also provides manufacturers the best opportunity to innovate at less cost.

What are the starting points, and how do companies embark upon a digital strategy?

Myny: There is a perception that U.S. industry has not kept pace with innovation,squeezing as much as possible out of a fleet of aging assets while holding onto historically large capital reserves. What will cause manufacturers to embrace deploying new hardware and software technology across their enterprise?

Cooney: While there is certainly truth there, I don't agree with that perception as a blanket statement, at least when I look at our customers in the process industries. In process, we see a strong appetite for our newer technologies in a number of areas. For example, we have customers that have already invested in remote monitoring & diagnostics and are beginning to embrace increasingly predictive condition monitoring. Analytical tools from 3rd parties can, among other things, predict impending faults and failures in pumps. Some of our midstream O&G customers are already incorporating this.

In addition, we have been actively working with customers to bring innovative electric driven products to the oil field. I can't go into specifics here, but there are some investment patterns developing that will provide breakthroughs in operating cost and environmental impact, and we are in the middle of that. But there are also factors that retard the adoption of newer technologies. As I mentioned in my earlier comments, utilization is extremely important in process industries. When the operation goes down, process customers can lose a great deal of money very quickly. They won't make changes on a whim, so new and innovative products have to offer compelling value, and be seen as having a high probability of success.

Batra: The perception is correct. Capital investments have been lagging. There's a disconnect between the record cash reserves of almost $2 trillion on the balance sheets of major U.S. corporations and the fact that investment as a percent of cash flow has been diminishing. Our manufacturing infrastructure is becoming obsolete. Even digitally mature manufacturers admit that parts of their operations still rely on PCs with floppy disk drives running DOS. The U.S. manufacturing sector has a growing gap–as McKinsey & Company recently put it–between industry's digital "haves," "have nots" and "have mores."

Myny: Let me speak to Canada. Canada has tremendous potential to take a leadership role in this 4th industrial revolution. We have the educated workforce, existing manufacturing hubs and support from all levels of government. What will cause it? If all stakeholders work together toward the same Industrie 4.0 vision.

Question: What will cause this perception to change?

Batra: At the heart of U.S. industry is the desire to be trend-setters.Companies that have embraced digitalization stand out. Others will follow. The key is not to wait so long that there's an insurmountable digitalization gap between you and competition. The consumer world is full of examples of companies that waited too long. Why would industry be different?